EFFECTS OF ADVERTISING ON DEMAND FOR NON-CARBONATED DRINKS IN DISTRICT MARDAN KHYBER PAKHTUNKHWA

Abstract

Linear Approximate Almost Ideal Demand System (LA/AIDS) model has been used to investigate the
effect of advertising on the quantity demanded of non-carbonated drinks (NCDs) in Mardan, Khyber
Pakhtunkhwa. In this study, non- carbonated drinks are categorized into three groups i.e. fruit juices,
mineral water and milk packs. Primary data were collected from 272 respondents in Mardan city. Chisquare
statistics and F-statistics are computed to see the relationship between different variables.
Estimated results from the LA/AIDS model for the three categories of NCDs reveal that brand
advertising has statistically significant impact on demand for NCDs. Results also show that all
demographic variables like household size, household age, number of children and dummy for
literacy are found significant for the two groups, fruit juice and milk pack of NCDs. While these
demographic variables are found insignificant for the third group, mineral water. All uncompensated
own price, cross price and expenditure elasticities are significant and have the expected signs. The
demand for all three groups is price inelastic. All expenditure elasticities are positive showing that all
the drinks in this study are normal goods with respect to their expenditure.